After hitting a seven-week high on Friday, gold for December delivery is down this afternoon by 1.30% to $1,138.60 per ounce on the COMEX.
A sharp drop in Chinese markets yesterday prompted a global selloff, but U.S. stocks have rallied today after China's central bank attempted to prop up its economy by lowering interest rates and banks' reserve requirements.
Further, consumer views of the U.S. economy improved in August, The Wall Street Journal reports.
The strong economic data is weighing on gold prices, as gold is often more desirable in times of political and economic turmoil, The Journal added.
"As to be expected, the calming of fears has taken the edge off of gold," Peter Hug, global trading director at Kitco Metals, said in a note to clients, according to The Journal. However, "it is not likely that a major swoon in gold prices is imminent, at least until we see whether this stabilization holds."
Separately, TheStreet Ratings team rates BARRICK GOLD CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate BARRICK GOLD CORP (ABX) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio of 1.26 is relatively high when compared with the industry average, suggesting a need for better debt level management.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Metals & Mining industry and the overall market, BARRICK GOLD CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- ABX's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 55.99%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- 41.46% is the gross profit margin for BARRICK GOLD CORP which we consider to be strong. Regardless of ABX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ABX's net profit margin of -0.40% significantly underperformed when compared to the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 18.9%. Since the same quarter one year prior, revenues slightly dropped by 9.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: ABX Ratings Report